Sunny Rock Estates & Developers ... vs Competent Authority And Others
2023 Latest Caselaw 2828 Cal/2

                     In the High Court at Calcutta
                    Constitutional Writ Jurisdiction
                             Original Side

The Hon'ble Justice Sabyasachi Bhattacharyya

                            WPO No. 2325 of 2022
                             IA No: GA 1 of 2023

           Sunny Rock Estates & Developers Private Limited
                                 Vs.
                  Competent Authority and others

     For the petitioner                :      Ms. Manju Agarwal, Adv.

     For the respondent no.3           :      Mr. Devajyoti Barman, Adv.

Ms. Sanjukta Basu Mallick, Adv.

     Hearing concluded on              :      08.09.2023

     Judgment on                       :      06.10.2023



     Sabyasachi Bhattacharyya, J:-

1. The petitioner is a developer of a residential housing complex. The

respondent no.3 is one of the flat owners in the said complex.

2. In the writ petition, the developer has challenged an order passed by

the Competent Authority under the West Bengal Apartment

Ownership Act, 1972 (hereinafter referred to as "the 1972 Act"),

whereby the Competent Authority accepted a declaration in Form A

submitted by the respondent no.3 on behalf of some of the flat

owners and calling upon them to submit the accepted Form A for

registration within 120 days from the return of Form A.

3. Learned counsel for the petitioner argues that the plot of land where

the disputed apartment has been constructed was allotted to the

National Cooperative Consumer Federation of India Limited (NCCF)

vide letter dated February 27, 2006 for the exclusive purpose of

constructing building for residential housing complex for cooperative

societies in terms of the agreement dated May 30, 2006 and deed of

conveyance dated December 26, 2006, entered into between the

NCCF and the West Bengal Housing Infrastructure Development

Corporation Limited. The NCCF (respondent no.2) was granted

exclusive right to develop the land for the purpose of constructing a

residential complex for cooperative societies. Learned counsel places

reliance on the relevant agreement and deed to highlight such

contention.

4. The exclusive right to develop the property was given to the

petitioner. A deed of rectification was executed on September 5,

2008 for rectifying the principal deed in respect of certain minor

corrections. In terms of one of the rectified clauses, "purchasers

belonging to various walks of life other than member of NCCF" was

also incorporated, to be read in consonance with Section 87 of the

West Bengal Cooperative Societies Act, 2006 (in brief, "the 2006 Act")

and Rule 131 of the West Bengal Cooperative Societies Rules, 2011

(for short, "the 2011 Rules"). The said rectification, it is argued, was

clarificatory in nature and did not alter the basic purpose of the

cooperative society.

5. The petitioner contends that, apart from paying the entire

consideration in terms of the agreement, the petitioner constructed a

separate building containing LIG/MIG flats far below cost price. In

terms of the development agreement, the petitioner got the plan

sanctioned, after which the NCCF handed over vacant possession of

the land to enable the construction. The entire housing project was

completed in the year 2015 and a completion certificate issued.

6. Learned counsel for the petitioner argues that the petitioner sold and

delivered the flats to various persons on the terms and conditions as

contained in the Standard Terms and Conditions (STC). The STC is

binding on all purchasers, but some of them have refused to pay full

consideration amount and other required charges for monthly

maintenance. Instead, such flat owners, ignoring the repeated

requests of the petitioner to form a cooperative society, are seeking to

take control of the management of the premises without clearing all

dues of the petitioner by forming a Owners‟ Welfare Association

which is not a cooperative society at all.

7. It is argued that it was the incumbent duty of the respondent no.1-

authority to enquire whether the formation of the owners‟ association

was sanctioned by the 1972 Act, before acceptingfor registration the

Form A submitted by respondent no.3, acting at the behest of the

recalcitrant flat owners.

8. Learned counsel submits that the premises contain more than 285

flats and the respondent no.3 represents only a few of them who have

vested interest in the premises.

9. The attempt to form such association, it is argued, is de hors the

2006 Act as well as the 1972 Act.

10. A group of people led by the respondent no.3 filed a case in the

Consumer Forum against the developer/petitioner, provoking other

flat owners against the petitioner towards non-payment of

maintenance charges. The same group of people, it is alleged, have

unitedly started a movement against the formation of a cooperative

housing society, going against the documents which are the genesis

of the rights of the flat owners.

11. It is argued that the flat owners are bound by the clauses of the STC

and formation of a cooperative society is an integral part of the same.

12. Learned counsel for the respondent no.3 opposes the submissions of

the petitioner and argues that formation of a cooperative society is

not integral to the purchase of the flats. In fact, by a rectification,

the Standard Conditions incorporated sale of the flats to persons

from all walks of life.

13. It is argued that the formation of a cooperative society in West Bengal

requires the flat owners to satisfy certain pre-requisites. However,

the flats were sold indiscriminately to people from all walks of life,

many of whom do not satisfy such pre-conditions. Hence, the

formation of a cooperative society was deliberately waived by the

petitioner while selling the flats to third parties. It is further argued

that there is no contravention of the 1972 Act in the acceptance of

the Form A submitted by the respondent no.3 by the Competent

Authority.

14. Learned counsel for the respondent no.3 submits that the said

respondent represents the majority of the flat owners and, as such, is

entitled in law to seek registration of an association. The petitioner

or its predecessor-in-title never intended to form a cooperative society

in the subject-property, for which neither the HIDCO nor NCCF ever

devised any mechanism to ensure that the flats are sold onlyto

persons eligible to become members of a cooperative society. It is

submitted that a large number of the present flat owners are from

outside West Bengal and foreign passport holders.

15. The NCCF (respondent no.2), it is contended, only intended to

commercially exploit the property, for which it was to get all sale

proceeds from the sale of flats by the developer/writ petitioner, to be

deposited in a separate bank account of the respondent no.2.

However, the same was never done or followed. On the contrary, a

total of Rs.10 Cr. on account of consideration of the sale of land was

paid by the writ petitioner to the HIDCO on behalf of respondent

no.2. To facilitate smooth sale of the flats, a deed of rectification was

executed, incorporating the lines "people from all walks of life" in the

eligibility criteria to buy the proposed flats. The allegations of

arrears of maintenance are disputed. It is submitted that the same is

not a subject-matter of dispute in the present writ petition. In fact, it

is argued by the respondent no.3 that the flat owners wrote countless

letters of complaints as to how the writ petitioner, even after

collecting huge maintenance amount, has kept the whole complex in

shambles and disarray, depriving the flat owners of the basic

amenities and kept a sinking fund of Rs. 2.4 Cr. with it for unlawful

gain.

16. Learned counsel for the respondent no.3 argues that a conjoint

reading of Sections 2, 10, and 10A of the 1972 Act makes it evident

that no part of the applicability of the act necessary for acceptance of

Form A was infringed in the instant case. The respondent no.3 and

the other applicants, being owners of the subject-property in

majority, are entitled to apply for acceptance of Form A.

17. It is argued that the word „inquiry‟ as envisaged in Section 10A (2) (a)

of the 1972 Act relates only to details of declaration made under

Section 10. After several trials and errors since the year 2021, the

corrected Form A was finally accepted on May 18, 2022 by the

respondent no.1-Authority. Previous similar applications were

rejected for technical defects.

18. The said process is being sought to be frustrated by the petitioner. It

is reiterated that the 1972 Act squarely applies. Hence, there is no

scope of applicability of the 2006 Act. Moreover, most of the flat

owners are not eligible to come within the meaning of Section 87 of

the 2006 Act. Hence, the clock cannot be set back by insisting upon

formation of a cooperative society.

19. The plinth of the petitioner‟s argument is the provisions in the initial

agreements containing clauses for formation of cooperative societies.

The agreement dated May 30, 2006, entered into between respondent

no.2 and the petitioner, in Clause 3.1, incorporates that the exclusive

right of development was conferred for construction of residential

housing complex for cooperative group housing societies to be

formed.

20. Again, in the indenture of sale dated December 26, 2006 between the

West Bengal Housing Infrastructure Development Corporation

Limited and the respondent no.2, it was stipulated that a building

was to be erected for residential housing complex for the cooperative

societies of the respondent no.2. Clause 2 thereof stipulated that the

purchaser was to use the said demised land exclusively for the

purpose of constructing building for residential housing complex for

its cooperative societies at the cost of the purchaser.

21. The „purchaser‟ under the said deed was respondent no.2, the NCCF.

22. Thus, the NCCF definitely had an obligation to its vendor to

construct the building for residential housing complex for its

cooperative societies. However, by the deed of rectification executed

between West Bengal Housing Infrastructure Development

Corporation Limited (the vendor) and the respondent no.2, it was,

inter alia, specifically incorporated that purchasers belonging to

various walks of life other than members of the NCCF would also be

entitled to purchase. After rectification, Clause 2 of the deed read to

mean that the purchaser (respondent no.2) shall use the demised

land exclusively for the purpose of constructing building for

residential housing complex for its cooperative societies to be formed

by the purchasers belonging to various walks of life other than

members of the respondent no.2 of the residential flats after their

purchase.

23. Respondent no.3 argues that the expression "various walks of life

other than members of NCCF" waives the cooperative clause in the

deed.

24. However, the said argument, on a plain reading of the said provision,

has to be taken with a pinch of salt. The expression "purchasers

belonging to various walks of life" referred to persons other than

members of the respondent no.2. However, the parent Clause 2

remained as it is, stipulating that the land has to be used exclusively

for the purpose of constructing building for residential complex for its

cooperative societies at the cost of the respondent no.2, which

cooperative societies, as per the rectification, are to be formed by

purchasers belonging to various walks of life other than members of

the respondent no.2.

25. However, a plain reading would not suffice in the context, since there

is a mutual contradiction in terms between the rectified Clause and

the original Clause.

26. The moment purchasers belonging to "various walks of life" are

invited, without any rider to screen out persons ineligible to form

cooperative societies, there has to be an influx of persons who are not

eligible to form cooperative societies.

27. In fact, the rectification also stipulates that the purchasers may be

people other than members of the respondent no.2, which opens the

floodgate. The moment a person who is not a member of respondent

no. 2 purchases a flat, there remains nothing to bind such person to

form a cooperative society.

28. In the supplementary agreement executed between the respondent

no.2 and the petitioner/developer on January 2, 2009, it was

specifically mentioned that in consideration of the developer having

agreed to incur all costs, charges, etc., for promoting the said

housing project, the respondent no.2, through the developer, shall

sell and/or transfer the saleable area in the said project to any

intending buyer upon agreeing the price on account of such sale of

the flat and/or unit at the declared rate.

29. Nowhere within the four corners of the agreement is there any

restriction against persons ineligible to form a cooperative society to

purchase a flat in the housing society, apart from Clause 11.4 which

stipulates, inter alia, that the developer shall arrange for periodical

payment by the intending and/or prospective buyers for the

formation of a cooperative housing society in consultation with the

respondent no.2 as per the Board-approved proposals that the

intending buyers of residential flats in the above project, other than

the existing members of the respondent no.2, may be allowed to

purchase such residential flats and/or apartments subject to the

undertaking to form a new cooperative housing society as per the

norms of cooperation of the department of cooperative societies.

30. In terms of the agreement dated July 27, 2012 between the

respondent no.2 and the developer/petitioner, the developer was

entitled, upon making the payment as stipulated in Clause 1(a) of the

agreement, to freely negotiate, finalise and conclude the sale of the

entirety or any part thereof of the total saleable area at approved rate

including car parking places as per sanction plan and to execute and

register all agreements for sale and/or deeds of conveyance and

receive and appropriate the proceeds thereof directly in its name

without any hindrance, obstruction, claim or demand from the

Federation/respondent no.2.

31. In the said agreement, there is no whisper about formation of

cooperative society.

32. The deed of conveyance executed in favour of the respondent no.3,

Clause (e) stipulates, inter alia, that the amount deposited by the

respondent no.3 shall remained deposited with the

developer/petitioner till the formation of the cooperative housing

society of which the purchaser shall become a member and the same

shall carry no interest. On formation of the cooperative housing

society, the developer shall make over to the society the amounts of

sinking fund or the balance amount thereof.

33. Clause (f) stipulates that the cooperative housing society to be formed

as envisaged therein shall manage and administer the maintenance

of the common parts and essential services at the building including

those mentioned in 3rd Schedule.

34. Thus, a full-blown arguable issue has been raised by both sides as to

whether the purchasers of the flats are bound by their deeds of

conveyance to become members of a cooperative society to be formed

in respect of the apartments.

35. The question is arguable, subject to interpretation of the various

provisions of the deeds/agreements and adjudication of the issue as

to whether the said condition of becoming a member of a cooperative

society is an integral and essential part of the agreement and the

purchase deeds of the flat owners. Along with such questions, it is

also to be decided whether, by opening up the purchase of flats to

persons from all walks of life who are non-members of the

respondent no.2 and need not necessarily be eligible to form a co-

operative in the first place, the petitioner can now enforce the

cooperative clause, since many of the purchasers may be ineligible to

form a cooperative society in law. The issue revolves around the

conduct of the parties as well. Whether the petitioner, after having

permitted such sale to ineligible persons, can now insist upon

formation of a cooperative society de hors the cooperative law is

another issue which is to be decided between the parties.

36. However, the said disputes are civil in nature and are required to be

canvassed before a competent civil court. The conspectus of the

present writ petition is extremely constrained. The writ petitioner

has impugned an order dated May 18, 2022 passed by the

Competent Authority under the 1972 Act. By virtue of such order,

the respondent no.1 accepted the declaration submitted by

respondent no.3 in Form A and endorsed the same on the body of the

Form A. The accepted Form A was returned with enclosures for

registration to be done within 120 days of the date of return of Form

A.

37. Thus, by the impugned order, the Form A submitted by the

respondent no.3 has merely been accepted.

38. The ambit and scope of consideration by the Competent Authority

while so accepting, as rightly argued by the respondent no.3, dwells

around the duties of the Competent Authority under the 1972 Act.

39. Under Section 2 of the 1972 Act, the Act shall apply to every property

"having residential units or both residential and commercial units"

and the sole owner or all the owners or majority of the owners of

every such property shall submit the same within such period as

may be prescribed by the provisions of the Act by duly executing and

registering a declaration setting out particulars referred to in Section

10.

40. Section 10 merely stipulates the contents of the declaration and that

it may be amended subsequently.

41. Section 10A provides that any declaration referred to in Section 2 or

any amendment thereto shall in the first instance be submitted by

the sole owner or all owners or the majority of owners within 30 days

from the date of execution to the Competent Authorities.

42. Under Clause (2) of Section 10A, on receipt of a declaration or

amendment, the Competent Authority shall, after issuing notice to

the parties concerned and holding "such enquiry", if any, as it may

consider necessary for the purpose, examine the declaration or the

amendment of the instrument, as the case may be, to ascertain

whether:

i) The property concerned comes within the purview of Act; and

ii) The declaration, amendment or the instrument is in order.

43. The limited question to be considered in the present context by the

Competent Authority is under Section 10A(2)(a)(i) which is to

ascertain whether the property comes within the purview of the Act.

44. "Property" under the 1972 Act has been defined in Section 3(k) to

comprise of the land, the building and the common areas and

facilities and in case of complexes having different types of

apartments meant for selling to people of different income groups,

property shall mean the land, building and common area and

facilities for that particular type of apartment.

45. Section 2 stipulates that the Act shall apply to every property having

residential units or both residential and commercial units. Thus,

under Section 10A(2)(a)(i), the limited enquiry of the Competent

Authority will be whether the property concerned comes within the

Act, being a property comprising land, building and common areas

and facilities having residential units or both residential and

commercial units.

46. Even such enquiry, as per Section 10A(2)(a), is at the discretion of

the Competent Authority in view of the expression "if any" which

follows the expression "holding such enquiry". Nothing in the above

provision involves any detailed enquiry as to whether the owner or

majority of owners applying for declaration under Form A have

honoured the purchase deed under which they have acquired title

and/or any right or liability arising out of their purchase deed and/or

the preceding documents of title.

47. Such enquiry falls within the domain of the civil court. In fact, the

issues discussed in the first part of this judgment, which are

essential to resolve the questions raised by the petitioner herein, are

all required to be adjudicated by a competent civil court, being pure

civil disputes between the parties. At best, if any of the parties are of

the opinion that there is any service deficiency, they may approach

the appropriate consumer forum. However, nothing within the four

corners of Section 10A of the 1972 Act empowers or obliges the

Competent Authority to enter into such disputed question of fact and

law at all.

48. In the present case, the Competent Authority, by its impugned order

dated May 18, 2023 has sufficiently discharged its duties under the

1972 Act. Hence, it cannot be said from any point of view that the

said order is vitiated by any contravention of law or legal procedure.

Hence, there is no scope of interference within the limited ambit of

the present writ petition.

49. Accordingly WPO No. 2325 of 2022 is dismissed on contest without

any order as to costs.

50. However, nothing in this order shall preclude the parties from

approaching the competent civil court and/or any other legal forum

having jurisdiction to resolve the issues raised by the parties inter se.

If so approached, the observations made herein shall not prejudice

the rights and contentions of any of the parties before such

forum/court in any manner.

51. GA 1 of 2023 is accordingly disposed of.

52. Urgent certified server copies, if applied for, be issued to the parties

upon compliance of due formalities.

( Sabyasachi Bhattacharyya, J. )

Later:

After the judgment is passed a prayer for stay of operation of the

order is made.

However, since the writ petition has been dismissed, the stay, as

prayed for even if granted would serve no purpose whatsoever, since

the writ petition could not thereby be revived. Accordingly, such

prayer is refused.

( Sabyasachi Bhattacharyya, J. )